Barracuda Networks just turned in its third consecutive quarterly beat. Here's what investors need to know.

Another quarter, another solid beat from Barracuda Networks(NYSE:CUDA).

Despite operating in an increasingly crowded space occupied by the likes of its larger peer in Palo Alto Networks(NYSE:PANW), the cloud security and storage specialist just exceeded Wall Street's expectations for the third time in as many quarters since going public last November. Shares of Barracuda Networks climbed nearly 3% in after-hours trading Thursday, extending a 2% jump during the regular session.

The numbersSpecifically, Barracuda Networks' quarterly gross billings grew 17% year-over-year to $87.6 million, while quarterly revenue grew 18% over the same period to $66.2 million. Of that, roughly 69% came from recurring subscription sales, as Barracuda's total active subscribers rose by more than 8,900 to over 214,000. Analysts, on average, were only looking for revenue of just $64.4 million.

Meanwhile, Barracuda also appeased investors' worries over whether it could live up to ever-increasing earnings expectations: Adjusted EBITDA grew 61% year-over-year to $19 million, while trailing 12-month free cash flow jumped 28% to $42 million. As a result, adjusted net income rose to $3.6 million, or $0.07 per diluted share, up from just $0.02 per diluted share in the same year-ago period. Once again, that easily outpaced analysts' expectations for earnings of just $0.03 per share.

On a GAAP basis -- which includes pesky items like stock-based compensation and one-time acquisition charges -- note Barracuda networks actually swung to a small profit of $151,000. That might not sound like much, but it's a huge improvement over the $2.4 million GAAP net loss it turned in as a privately held company this time last year. As Barracuda continues to grow, its levels of true profitability should only look more attractive going forward.

On guidanceFinally, Barracuda raised guidance for its full fiscal year, as it now expects earnings in the range of $0.14 to $0.18 on revenue of $270 million to $274 million. By comparison, analysts went into the report modeling full-year earnings of just $0.14 per share on sales of $270.27 million.

So what is Barracuda Networks doing right? For one, it places a huge amount of emphasis on creating powerful security and storage solutions which are also easy to implement -- and as a former IT geek myself, I can personally attest that isn't always the case. Among a handful of its new product releases this quarter, for example, stood the extended functionality of Barracuda's SSL VPN solution, which enabled businesses to offer employees improved remote access to internal web applications and files from nearly any mobile device.

But Barracuda also isn't alone in its relative outperformance, either. Palo Alto Networks, for example, which chases many of the same clients, is expected to post even more impressive annual revenue growth of 47% this year, and is riding a wave of momentum after releasing its own solid quarterly results in late May. And much to investors' excitement, Palo Alto simultaneously announced the long-awaited resolution of a patent infringement case with Juniper Networks. Over the long-term, that should ultimately reduce Palo Alto's cumbersome litigation costs and prop up its bottom line.

Foolish takeawayNow don't get me wrong: Shares of Barracuda Networks don't look particularly cheap trading at just over 7 times trailing 12-month sales, and 155 times next year's estimated earnings. But we're also talking about a relatively fast-growing company which is just crossing over into sustained long-term profitability. And with the cloud-computing space effectively still in its infancy, there should be room for multiple companies to survive and thrive. If Barracuda Networks' results today are any indication, I think it could be poised to further reward patient shareholders going forward.

Author

As a technology and consumer goods specialist for the Fool, Steve looks for responsible businesses that positively shape our lives. Then he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.